Category Archives: Affordable Care Act

The Electronic Health Record: Boon or Boondoggle?

In 2009, Congress passed the American Reinvestment and Recovery Act. In this law was a requirement that physicians and hospitals must start using electronic health records (EHR) by 2014. Written into the law were Medicare reimbursement penalties for those who have not converted to the electronic records within the stated time-frame.


The push for electronic health records, at least on the political stage, dates back to the 2004 State of the Union Address of President George W. Bush. In the Address, President Bush pushed for the establishment of the Office of the National Health Information Technology Coordinator and charged the office to develop a “health information technology infrastructure” that “reduces health care costs resulting from inefficiency, medical errors, inappropriate care and incomplete information.”[1]


One of the main incentives for establishing the EHR was to reduce health care costs. In fact, there were estimates that the EHR could reduce costs up to 20%.[2] Even though the use of electronic records has great potential to improve care and reduce costs, current limitations of the records have prevented these, hoped for benefits, from reaching their potential.


The Affordable Care Act has emphasized the need for an EHR.[3] Starting in 2015, Medicare payments would be reduced for physicians who have not adopted an electronic health record. Medicare has been directed under the law to look at cost and quality data gleaned from the electronic medical record in order to calculate payments for physicians. Some clinicians have chosen to stay with the paper record and take the loss. I think they are being short-sited.


First let’s look at the potential benefits of an electronic health record.


With an electronic medical record accessible to any health care provider, the records should be available at any time and at any site where care is being provided. There would be no delays in getting the information needed to provide timely and appropriate care. Previous care episodes, including lab values, radiographs, and other diagnostic studies would be available and visible over the internet. Operative notes, discharge and progress notes, consults and other written records would be legible and complete. This data would help prevent duplicative testing and would facilitate coding and accurate billing.


The electronic records would reduce the need to fill out the same forms every time a new provider was seen. It would allow each provider to be warned of any allergies or other critical information that was found during previous episodes of care; view alerts could be programmed to pop up and provide these warnings whenever the record is opened.


With electronic records, patients can communicate with their provider over the internet. Questions can be answered, new symptoms can be described, and appointments can be made or changed without an office visit or a phone call. Some care could be provided in an outpatient setting which would reduce costs. Management of diabetes, chronic obstructive pulmonary disease, and congestive heart failure are examples where there have been significant cost savings by keeping the patient healthy enough to stay out of the emergency rooms and/or being admitted for in-hospital stays for management of disease exacerbations.


Safeguards can be built into the system to prevent adverse events; preventing a prescription of a drug the patient is allergic to would not be allowed. Of course, a negligent provider may override the warnings, but that would put him at risk for a malpractice suit.


The records have areas where the provider can access search engines to find the latest medical information on disease entities. This would enhance his ability to order the appropriate diagnostic tests and make the appropriate therapeutic decisions. I once had a conversation with the General Counsel of IBM where I stated my concerns that Watson[4] may put physicians out of a job. I was assured that the computer was meant to help us, not to replace our best medical judgment.


The EHR can also remind the physician when certain care is due such as vaccinations and (shudder) colonoscopies.


Electronic records allow for easier referrals to specialists and allows for easier access to follow-up care.


E-prescriptions can be sent electronically to the pharmacy. Scripts would be less likely stolen and mistakes in verbal communication from sound-alike drugs would be minimized.


Electronic health records make it much easier to perform “data mining” for research and quality assurance endeavors. With the proper software, large groups of patients with various disease processes can be found. Charts, graphs, and costs can be ascertained with a click of a mouse. Various treatment modalities can be compared as to efficacy and cost effectiveness. This would allow advances in care to progress at a quicker pace; the cost of the research would be decreased as data can be gathered quickly by the computer. Previously, this research was tedious; researchers would gather the information one chart at a time. The data would be placed on spread sheets one patient at a time.


Quality data can be quickly found with the EHR. This would allow hospitals to keep an eye on quality measures and would allow for monitoring bodies to quickly identify low outliers so that remedial measures can be instituted in a timely fashion.


As a physician, I recognize the benefits of the EHR. I also recognize, and have experience with, its shortcomings.


For some reason, the different purveyors of the EHR have not made their systems compatible. The premise that the records would be available to all clinicians has not come to pass. The records are great if you stay within the system (like we have in the Veterans Administration), but the records are not accessible by care-givers outside systems.


Perhaps the greatest criticism of the electronic health record is that it interferes with the doctor-patient relationship. Physicians spend more time looking at the computer screen and typing than looking at and listening to the patient. The doctor-patient relationship is an intimate one. We listen to very private concerns and we lay on the hands to examine the body. This relationship is a property interest that lies with the patient and it can be argued that this privacy interest is protected by the United States Constitution. The government and any other third party should not be allowed to interfere with this relationship. And yet the forms we have to fill out for billing, research, and quality assurance does infringe on this interest.


Physicians are trained to gather data, think about possible diagnoses and then act using their best medical/surgical judgment. When we use the electronic record, entering data makes us feel like a clerk. If the computer tells us what to do, then how can we function as independent practitioners?


Electronic health records are expensive to put into a practice. They cost between $80 thousand and $100 thousand and it is often necessary to hire a scribe to enter the data. This scribe can be cost effective as it frees up the physician to better communicate with the patients and it allows him to generate extra income. These scribes can cost about $25 thousand a year in salary alone. Will the presence of the scribe infringe on the physician-patient relationship? Will the patient be willing to have another person, a non-physician, in the exam room? How much training and skill must the scribe have in order it ensure that the information entered into the medical record is accurate?


Between the cost of the electronic health record, the computers needed in each exam room to access the record, the scribe costs, and the decrease in reimbursements from Medicare, Medicaid, and other third party payers, it is not surprising that many private practitioners are leaving their practice and becoming employees of hospitals and medical groups. Becoming an employee of a hospital has its own set of problems.


Physicians should not be primarily concerned with how resources are spent and how forms should be filled out to best assure proper payment. Insurers and government efforts may not be aligned with the best interests of the patient. As more physicians become employees of hospitals and medical groups, more pressure is applied to generate income as opposed to optimize patient care. If the income generated by the practitioner does not meet the expectations of the employer, they may have their salary reduced or, worse, they may be let go.


It is noteworthy that the writers of the Affordable Care Act have chosen to not participate in either the state or federal exchanges. They want to keep what they already have. What do they know that we don’t?


Overall, I think the EHR is a good thing.  I like having the patient’s records easily accessible from any computer in the hospital. The records are organized and they are easy to read. I was trained in the late 70’s and early 80’s when paper records were all there was. Often, the records were lost in the medical records section of the hospital. Even when we could get the records, some of the notes were illegible (doctors are notorious for terrible hand-writing), and often, the data was not up to date.


Despite the obvious benefits, improvements must be made. All EHRs need to be compatible and accessible for all providers. Use of the record must be easier so as not to detract from the physician-patient relationship. The costs must go down for the clinician (or payments must go up). These records are here to stay; we are not going back to paper.


As physicians, we took an oath that says “Primum, non nocere”—“First, do no harm.” This is part of the Hippocratic Oath and it is not written in any legislation that I am aware of.[5]


When patients come to their doctor, they are not concerned with regulations from the government that may be coercive and not in their best interests. They want the physician to take care of them to the best of their ability. This is what we physicians must continue to strive for. We are scarce medical resources. We should remember this.


[1]White House, “Transforming Health Care: The President’s Health Information Technology Plan,” 2004,


[2] U.S. Department of Health and Human Services, “Office of the National Coordinator for Health Information Technology,” 23 May 2005,


[3] Section 3007 of the Affordable Care Act mandates that the Center for Medicare and Medicaid Services apply a value modifier under the Medicare Physician Fee Schedule.  Cost and quality data, gleaned from the electronic health record, will be used in calculating payments for physicians.


[4] Conversation with Michelle Browdy, General Counsel, IBM (2015). Watson is the IBM supercomputer that beat the humans on Jeopardy. It was named after the founder of IBM, Thomas Watson, not, as many believe, Sherlock Holmes’ partner and friend, Dr. Watson.


[5] I have a copy of this oath on the wall of my office. I look at it every day that I am there.



by Darryl S. Weiman, M.D., J.D.

Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN

MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 

The Collateral Source Rule and Obamacare

The Collateral Source Rule is a legal doctrine holding that the damages being asked for by a plaintiff should not have payments coming from a source other than the defendant deducted from the damages the defendant would otherwise have to pay. The origins of this rule lie in the common law whereby the jury was forbidden from considering evidence of the plaintiff’s health insurance in covering some of the future medical expenses emanating from the defendant’s negligence.


It seems like this rule would allow the plaintiff who has health insurance get a windfall if he wins the malpractice suit. The insurance and the defendant would both be paying for the same projected future health care costs which were due to the injuries. As a physician, this rule seems to be, on its face, unfair. A look at the history of the rule is warranted.


The Collateral Source Rule comes from common law which dates back to the nineteenth century. At that time, health insurance was rare and those that had it paid for the premiums out of their own pockets. The courts felt that there was a strong public interest in having health insurance and they did not want to penalize people who had the insurance by decreasing their medical malpractice damages by the amount paid for by the insurance. The problem with the common law was the potential for the plaintiff of obtaining a double-recovery for the future medical expenses calculated in the damage claim of the malpractice suit.


As more people obtained health insurance, especially from employer plans, the strong public interest in getting people to get coverage became less of an issue. In a quest for fairness, some states passed collateral source statutes which aimed to prevent the double-recovery of damage claims. Under these statutes, the jury was still prevented from hearing evidence of health insurance coverage when deciding on the damage award. However, after the jury verdict, the defendant is allowed to present evidence of collateral sources of payment before the judge. The judge would then be allowed to reduce the jury award by an amount that was “reasonably certain” to be covered by the insurance policy.


With the passage of the Affordable Care Act (ACA) in 2010, the near universal health coverage mandates takes away the need of the Collateral Source Rule. Juries should now be allowed to hear evidence of health care coverage when evaluating the damage award in a malpractice action. The public interest of incentivizing individuals to purchase their own health care insurance is now gone; the ACA now requires the purchase of health care insurance and those who do not are subject to penalties (a tax?).


Although the Collateral Source Rule still stands, it is likely that future litigation will attack the Rule. There is a case on point. In Aidan Ming-Ho v. Verdugo Hills Hospital, a medical malpractice case, the jury gave the plaintiff the verdict and awarded damages which included future medical costs. The hospital argued, on appeal, that it should have been allowed to present evidence of the plaintiff’s health insurance coverage to rebut the claims for future medical expenses especially in light of the ACA whereby “the availability of such federally mandated available insurance options makes the prospect of future health insurance coverage for plaintiff anything but speculative.” Aidan Ming-Ho Leung v. Verdugo Hills Hospital, 2013 WL 221654 (CA Ct. App., 2013)


The Leung court was not convinced. The court held that “such evidence, standing alone, is irrelevant to prove reasonably certain insurance coverage…because it has no tendency in reason to prove that specific items of future care and treatment will be covered, the amount of that coverage, or the duration of the coverage.”


Health insurance policies may differ as to what is covered, how much will be paid for the health care, and the duration of the coverage. There are caps to some policies and the court recognized this. Both the duration and the quality of health insurance policies were variable and could be changed by the carrier at any time. The fact that the patient had medical insurance did not guarantee that his future medical expenses would be met.  It made sense to keep this information from the jury.  Rather than penalize the patient with poor health care coverage, the jury would be better off not knowing that the patient even had coverage.


However, under the ACA, there is a certain minimum amount of coverage that must be in the policy. Also, the policy has no ceiling of benefits and the policy can attach to the patient forever. As such, it makes sense to argue that the coverage that must be provided under the law should now be presented to the jury prior to making their deliberations. The strong public policy of encouraging patients to obtain health care is fast becoming a non-issue as most people are now required to get a policy or be covered under Medicare or Medicaid.


The issue addressing the necessity of the Collateral Source Rule will likely be litigated in several courts in the near future. Plaintiffs will argue that the Rule is still needed as the long-term viability of the ACA is still unknown.  Insurers are leaving the market as their losses are significant, people are going without health insurance as their co-pays and premiums are going up, and there are only minimal penalties to holding off on buying insurance until an illness or injury strikes.


At this time, there is uncertainty that the ACA will survive both from a financial and a political standpoint.  If a Republican elected to the Oval Office, the ACA may be overturned. This is especially likely if the House and Senate remain in republican hands. If the insurers continue to leave the market due to financial losses, there will be a complete collapse of the system.  As long as the future of the ACA is uncertain, it is unlikely that the courts will see fit to revisit the Collateral Source Rule. Perhaps it would be best to keep the knowledge of a health insurance plan in the hands of the judge anyway.



by Darryl S. Weiman, M.D., J.D.

Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN

MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 


Subsidy Funding of Insurers under Obamacare

This article by Dr. Weiman also first appeared on Huffington Post on June 13, 2016.


No Money shall be drawn from the Treasury, but in Consequence of Appropriation made by Law… Article I Section 9 of the United States Constitution


A federal court judge has recently ruled in favor of the House of Representatives in a lawsuit which challenged the Obama administration’s funding of subsidies for insurers who were providing health care policies on the exchanges. John Boehner pushed for the lawsuit when he was Speaker of the House; he felt it was an overreach by the Obama administration which was paying the subsidies to insurance companies without the appropriate funding passed by

Congress. The Congressional Budget Office estimates that this funding would be about $130 billion from 2017 through 2026.


This case was also argued on a “standing” basis. Judge Collyer held that the Congress was injured when the administration paid the subsidies. The “power of the purse” is a practical way for the Congress to exercise its check of the Administration. Without this power, they would be harmed; thus standing was affirmed.


One of the linchpins of our Constitutional republic is the separation of powers. Article I of the Constitution gives the sole power of spending to Congress. This “power of the purse” was meant to be a critical check against tyranny. If the President were to have the power to legislate (designate how money from the Treasury would be spent) along with the power to enforce the laws, then he could essentially ignore Congress altogether. He would have the power of a dictator, not a president. This is what the Constitution was meant to prevent.


The Obama administration had argued that they were trying to faithfully implement the law and the funds they were using were in another section of the law dealing with subsidies to reduce the cost of health care insurance.


Under Section 1401 of the Affordable Care Act (ACA), the insurance companies that were participating in the exchanges were required to provide discounts to eligible lower income people who were purchasing health insurance.  Under Section 1402 of the law, no money had been allocated for the insurance companies themselves although they had been promised subsidy support. This is not the first time that Congress had promised financial support but failed to allocate the necessary funds needed for the support. In fact, this seems to be a common occurrence; see “unfunded mandates”.


Even without the money from Congress, the administration decided to pay these subsidies anyway. The insurance companies were losing billions of dollars and they were threatening to leave Obamacare if this support was not forthcoming.


In a way, President Obama challenged the Congress to file this suit when he taunted them with his statement that “I’ve got a pen and I’ve got a phone.” He seemed willing to challenge the concept of the “separation of powers” and provide the money from a different section of the ACA which Congress had only allocated for tax credits for some eligible people who were

purchasing policies on the various state exchanges. There was no explicit funding of the subsidies in this section.


In her decision, Judge Rosemary Collyer wrote that the “Affordable Care Act unambiguously appropriates money for Section 1401 premium tax credits but not for Section 1402 reimbursements to insurers.” The Obama administration had argued that this appropriation could be “inferred” but that claim was rejected by the judge. Laws must be very specific when they relate to appropriations coming out of the United States Treasury.


Under Judge Collyer’s ruling, Health and Human Services (HHS) has been enjoined from paying subsidies to the insurers but she stayed the order pending the expected appeal of the Obama administration. It is foreseeable that the insurance carriers will not wait for a final decision as their costs are rising significantly. They will either raise their rates or they will leave the exchanges altogether. In fact, this is already happening.


Judge Collyer recognized that she may be overruled on appeal. As such she stayed her injunction. However, without the payments from the government, the insurance companies will be facing significant financial losses.


Several carriers have already predicted they will need double digit increases on their premiums for 2017. These premium increases will be on top of premium increases that went into effect in 2016. With these increases, more people, especially the healthy ones, will be inclined to go without insurance and pay the penalty instead. Without the participation of these healthy people to off-set the costs of the older and sicker patients who will be using the insurance, the providers may not make it. No company can remain viable if they are likely to lose money on a continuous basis.


If the decision is upheld on appeal, then it is foreseeable that many insurance companies will have to raise their premiums, increase the deductibles of the policies, and/or withdraw from providing policies under the exchanges. In either case, the ACA will be significantly affected as many people will choose to opt out and pay the penalty (tax) instead of paying higher premiums for lesser policies. In light of “guaranteed issue” and “community rating” people will be inclined to hold off on buying health insurance until they need it; there is really no penalty for waiting so long as the penalty is less than the costs of the policies being offered.


In the unlikely scenario that the ACA is put in jeopardy with this decision, the republicans will be under a lot of pressure to get a viable alternative in place. If a democrat wins the presidency, a movement to a single party payer will likely occur.


Could the appellate court overturn the decision? Of course it can. The DC Circuit, which has historically sided with the Obama administration, is likely to do the same for this case. They can hold that the money appropriated under Section 1401 can be used to pay for the subsidies.


It would not be too much of a stretch to predict that the Supreme Court will also disagree with Judge Collyer. After all, in two previous Supreme Court decisions, Justice Roberts upheld Obamacare; first by equating federal and state exchanges. In the second case, Justice Roberts held that the penalty for not buying health insurance was allowed under the taxing power of the Constitution. Four justices felt this power was allowed under the Commerce Clause but Justice Robert’s was not willing to affirm on this basis.


The Supreme Court may have the final say as it often does. The Supreme Court is not last because it is right; it is right because it is last. There must be finality in the law or the litigation could go on forever.



by Darryl S. Weiman, M.D., J.D.

Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN

MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 



The Affordable Care Act and Medical Malpractice Reform

This article by Dr. Weiman also first appeared on Huffington Post on June 04, 2016.


In Atlas Shrugged, written by Ayn Rand, a dystopian America is described. Health care is addressed in this novel. One of the characters, a prominent neurosurgeon decides to leave practice as opposed to losing his autonomy in patient care. For him, it was no longer worth it to be a physician.


The goals of health care reform are to ensure that everyone has access to high quality care and the care is affordable. Most providers believe that significant cost savings would be realized if there was meaningful tort reform. In fact, when the Affordable Care Act (ACA) was being formulated, there were numerous discussions relating to the limitation of future damages for patients injured by medical negligence, modification of the collateral source rule, and funding to the states for experimentation on litigation alternatives or substitutes.


Unfortunately, the only part of the ACA relating to malpractice reform to be passed was section 10607 of the Act which, “authorize[s] the Secretary of Health and Human Services to award demonstration grants to states for the development, implementation, and evaluation of alternatives to current tort litigation.” This section does not eliminate malpractice litigation; it will only look at alternative ways of resolving the cases. At this time, a health court model is being looked at in some states but the effects on malpractice cases are not yet known. It is also unknown if this model will still require a report to the National Practitioner Data Bank if all or part of the payment is due to the actions of the practitioner. I think the report will still be required so it is unlikely that the physician will change his tendency to practice defensive medicine. As a result, this section of the law is unlikely to result in a decrease in health care costs.


The risk to providers remains. Malpractice coverage will still be required to practice and losses can be catastrophic. Even if a verdict is within the limits of the coverage, the provider who is found liable will be reported to the National Practitioner Data Bank which could have significant detrimental consequences if he wants to move to a new practice or when his privileges are up for renewal at the facility where he presently practices.


With mandatory health insurance or Medicare and Medicaid, it was hoped that the 30 million uninsured in the country would now be covered. With a ban on lifetime payout limits and a prohibition on insurers from excluding patients with pre-existing conditions, the duration of coverage was also significantly increased. With more patients covered and covered for a longer time, it is foreseeable that more malpractice claims will result.


Despite the passage of the ACA, physicians and other health care providers continue to practice “defensive medicine” in hopes of better defending or even preventing future malpractice claims. By ordering more tests and doing more procedures in hopes of covering all the bases and not missing any significant diagnoses, the hope is to avoid any future litigation; the extra procedures and tests may not be in the patient’s best interests and some may even be harmful, but it will allow for an easier defense if faced with a claim.


There are several mandates under Obamacare which require significant expenditures on the part of health care providers. These expenditures have led to increased overhead costs which many, if not most, private practitioners are not able to meet. As a result, many providers are joining health care groups or hospitals whereby they become employees. The groups take care of the overhead costs and the providers are paid a salary.


One of the results of this practice model is that outpatient care and inpatient care is being divided. Patients are no longer the responsibility of a single practitioner. They may see a family practitioner in the office setting, but in-patient care will be provided by a hospitalist who has not yet had the opportunity to form a physician-relationship. The lack of this relationship is more likely to result in some animosity, especially if the hospital course does not go well. It cannot be good if the patient is viewed as a customer of the hospital as opposed to a person with whom there is a long-standing relationship. This inherent animosity will make it more likely to have a malpractice suit filed if the patient does not do well.


When a physician becomes an employee, they are expected to follow guidelines and protocols many of which were approved by Medicare. If the physician is able to meet certain benchmarks outlined in Medicare, they will be rewarded with a share of the savings. Failure to follow these guidelines can lead to economic penalties; the provider is faced with a dilemma—do what he feels is best for the patient or face decreases in pay and, perhaps, even the loss of his job.


If the patient suffers harm, a medical malpractice suit is likely to follow. Then there is the issue of malpractice premiums. If the employer is paying the premiums, will the lawyer hired to defend the case be answerable to the employer or the physician? If this is not spelled out in the physician’s employment contract, it is likely that he will need to hire his own attorney to be sure his interests are protected in the suit. This can be a significant expense.


The physician is caught in the middle. Too bad! The jury will not be sympathetic to the economic chains attached to the practice. The jury expects the physician to use his best medical/surgical judgment at all times. The standard of care is unchanged under the ACA; the physician will be expected to do what a reasonable physician would do if faced with the same or similar circumstances. I do not think that economic considerations will be entertained in this analysis.


With the changes in the health care environment driving many practitioners out of private practice, it is likely that we will see a rise in contract health care on a cash basis. For those who can afford it, this will be personalized health care with a known provider who will guarantee that he will provide the care needed as an outpatient and will guide the care needed in the hospital environment. The third party payers will be left out of this arrangement. We are already seeing this type of care with “concierge” practices and with “medical tourism”. The model has been established in cosmetic surgery and Lasik eye surgery. As for medical tourism, this model is already being offered, at very competitive rates, in several foreign countries for such things as heart surgery.


In the final analysis, it looks like the ACA has created a health care environment where it is more likely for the provider to be the target of a malpractice suit. Although alternative forms of resolution will be investigated, the target will remain the same.


Tort reform will likely be a slow process handled by the states. Physicians will vote with their feet. They will migrate to the states which have the more favorable laws relating to medical malpractice. States with unfavorable laws will be forced to change or be faced with a shortage of physicians. This scenario has already played out in Mississippi. In the meantime, health care costs continue to rise at a rate that exceeds regular inflation.



by Darryl S. Weiman, M.D., J.D.

Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN

MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 

Pay Cuts for Physicians

The Affordable Care Act (ACA) was enacted to ensure that most people would have access to affordable health care insurance and to decrease the high cost of health care in our country. I have previously written about the Independent Payment Advisory Board (IPAB) and the role they will play in decreasing costs, but it looks like Health Care Insurers are already acting to cut payments without even waiting for guidance from the IPAB.


Highmark, a Blue Cross and Blue Shield provider that has programs in Pennsylvania, Delaware, and West Virginia has recently announced that they will be cutting payments to their participating physicians because of mounting losses from the plans they have provided through the ACA exchanges in those states. Highmark has found that they are paying out more in claims than they are collecting in premiums. This is not surprising as many healthy patients have chosen to opt out of health care insurance until they need it. Without participation from healthy patients who pay premiums but don’t use much health care, the losses were predictable.


Highmark claims they lost $221 million in 2014 and are projected to lose another $500 million in 2015 because of the mismatch in claims and premiums.     In the original ACA plan, recognizing that health insurers may be facing some significant losses until the system comes into balance, the Act originally had federal subsidies which were meant to offset losses for the first three years of the Act. However, the Congress, which is now under Republican control, has blocked the administrations access to these funds for the time being. As a result, companies like Highmark are only getting 13% of the subsidy money they were counting on; which was projected to be $220 million in 2014. Even though 13% of the money was made available, Highmark has not yet received any of their shares.


As a rational business, these losses will be handled by pay cuts to the physicians who are Highmark providers. Of course, Highmark could spread some of the losses to the participating hospitals but they have chosen not to do this. Apparently, cutting reimbursements to hospitals would require hospital specific negotiations whereas the doctor contracts are more flexible and “adjustments” are already built in to the present contract structure.


Highmark could have taken the losses and remained viable by dipping into their reserve funds and they have done this in the past, but they have now decided that subsidizing money-losing exchange plans is no longer a reasonable option.


Highmark is not the only insurer that is losing money under the ACA. I have previously written about Kynect, the Kentucky exchange which is talking about abandoning their state exchange altogether. The United Health Group has recently reported a $720 million loss for 2015. If they don’t see a financial turnaround soon, it is predictable that they will pull out of the exchanges. Other insurers such as Aetna and Anthem are also losing money on the exchanges.

The insurers are facing increasing losses because the patients opting into insurance purchases are a riskier pool than the insurers had originally anticipated. Highmark has shown that the congestive heart failure rates for those among the ACA purchasers was 43% higher than for members of their regular commercial plans. Chemotherapy claims per ACA users has been found to be 49% higher than the regular commercial users. These patients have high cost for care and the premiums paid by these patients (due to community ratings) does not cover the costs.[1]


To remain in business, the insurers will need to increase their premiums and decrease their payments on claims. Decreased payments can be done by increasing deductibles on the plans as well as paying less for each claim made. It is hoped that more healthy people will opt into buying health insurance since the penalty (tax?) for not having health insurance is scheduled to rise. However, if the penalty is still significantly less than the premiums, it is unlikely that a rational healthy person will participate in the exchanges. This is even more likely due to “guaranteed issue” which allows a person to buy insurance at any time; this means he can wait until he is sick to buy the needed insurance.


Another strategy being used by the insurers is to deny payment for those drugs or procedures that do not meet the insurance company guidelines. This denial usually results in the health care provider appealing the decision which can be labor intensive and time consuming. Providers are justifiably aggravated as it seems like gatekeepers for the insurance companies are making clinical decisions on patients they have never seen. Also, guidelines have never been deemed to be the “standard of care” as each patient has their own unique characteristics which the provider needs to understand in order to make a reasonable medical judgment.


If the payments to physicians are decreased, there will come a time that they will no longer participate as their overhead costs will exceed their remuneration. They will either refuse to see patients with certain insurance or they will retire. Either of these two options can put the Affordable Care Act in jeopardy as physicians are a critical resource in the health care model.


Can the government force the physicians to participate in the ACA? Can the government prevent the physicians from retiring? These questions will need to be litigated and will probably have to go to the Supreme Court for a definitive decision. This process will take time.

[1] Robert Lowes, Medscape Medical News, March 3, 2016.




by Darryl S. Weiman, M.D., J.D.

Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN

MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 

Commentary on National Federation of Independent Business v. Sebelius

In 2010, Congress enacted the Patient Protection and Affordable Care Act (ACA)[1]. The goals of the Act were to increase the number of Americans covered by health insurance and to decrease the cost of health care. No republicans voted for the bill. Since the Act’s passage, it has come under legal attack from many fronts.

Under the Act, the States were to set up exchanges which listed the various insurance plans and the associated costs. Accessing the exchange website would allow people to shop for a plan that would best fit their needs. If a State decided that the cost of setting up the exchange was too high or for whatever other reason, then the Federal government would come in and set up its own exchange. However, under the law, only the States that had set up their own exchange would have their citizens access tax credits which could help pay for the insurance premiums.

The first controversy to make it up to the Supreme Court dealing with this Act was King v. Burwell. In this case, the Supreme Court held that tax credits would be made available to all who used the exchanges, even the exchanges which had been set up by the Federal government.[2] In effect, the Supreme Court, in a divided opinion, saved the ACA by making insurance premiums more affordable in all of the States.

The second controversy to make it to the Supreme Court was National Federation of Independent Business v. Sebelius. This paper will look at the National Independent Business decision.

One of the key requirements under the Affordable Care Act was the individual mandate which required most Americans to obtain health insurance coverage.[3] For people who were not exempt from this coverage and were not covered through an employer or a government program, this requirement could only be met by buying health insurance from a private company. The legal issue pertaining to this individual mandate was the power of the Congress to force the buying of health insurance by people who were not participating in this particular form of commerce.

A second important requirement of the Act was to expand Medicaid to help cover all adults with incomes up to 133 percent of the federal poverty level. The legal issue relating to this expansion was the ability of the Congress to force the states to cover several more people under Medicaid or suffer the loss of all federal funding that had previously been given for Medicaid.

The third issue addressed by the Court in this decision was the applicability of the Anti-Injunction Act if, in fact, the payment required by those who did not obtain health insurance was deemed to be a “tax” as opposed to a “penalty”.


The Individual Mandate

Shortly after President Obama signed the Affordable Care Act into law, thirteen States filed a complaint in the Federal District Court for the Northern District of Florida. Eventually, 13 more States, the National Federation of Independent Business and several individuals, joined in the suit. The main issue alleged by the plaintiffs was that the individual mandate exceeded Congress’s power under Article 1 of the United States Constitution.

The District Court agreed with the plaintiffs. This Court also held that the individual mandate could not be removed without changing the law, thus, the whole ACA had to be struck down.

The Court of Appeals for the Eleventh Circuit agreed. The majority opinion of that Court affirmed that the Commerce Clause does not give the Congress the power to force people to engage in commerce. If the Commerce Clause gave Congress that kind of power, there would be no limits on what Congress could do and that would violate precepts of Federalism.

Other Courts of Appeals came up with different opinions. The Sixth Circuit and the D.C. Circuit held that the individual mandate was a valid exercise of Congress’s power under the Commerce Clause.

The Fourth Circuit held that the individual mandate was really a tax. Since a tax was involved, they reasoned that the Anti-Injunction Act would apply which would prevent the courts from assessing the merits of the case until the tax had been collected.

When several Courts of Appeal come up with very different holdings, the Supreme Court is likely to take on the case; that is what happened here.

In the Supreme Court opinion, four of the Justices felt that Congress had the power to make the individual mandate into law. They agreed with the Sixth Circuit and the D.C. Circuit that this power was emanating from the Commerce Clause. Four other Justices said that this power was not available under the Commerce Clause because if it was, Congress could force people to buy things, i.e., engage in commerce. This would be more than regulating commerce which was on-going. As Justice Scalia wrote, “Upholding the Affordable Care Act under the Commerce Clause would give Congress the same license to regulate what people do not do…They gave Congress the power to regulate commerce, not to compel it.”

Chief Justice Roberts agreed that the power was not within the Commerce Clause, but it was within the power of the Taxing Clause. With his vote, the individual mandate was deemed constitutional and the Affordable Care Act was, once again, saved by his vote. Even though President Obama assured the American people that this was not a tax, government lawyers did raise this argument during the litigation.

Surprisingly, even though the Congress stated that this penalty must be paid to the IRS with the individual’s taxes, the Act forbade the IRS from using its usual enforcement tools, criminal prosecutions and levies, in collecting the tax. Also, the law allowed for some individuals to be exempt from the penalty even though they were subject to the mandate. This would be for those whose income was below a certain level and the Indian tribes.

The dissent gave several arguments refuting the notion that the individual mandate was a tax. Justice Scalia wrote “…to say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it. Judicial tax-writing is particularly troubling. Taxes have never been popular, and in part for that reason, the Constitution requires tax increases to originate in the House of Representatives. That is to say, they must originate in the legislative body most accountable to the people, where legislators must weigh the need for the tax against the terrible price they might pay at their next election, which is never more than two years off.”[4]


The Medicaid Expansion

            When Medicaid was first enacted in 1965, it offered federal funding to the States to help pregnant women, children, needy families, the blind, the elderly, and the disabled to get medical care when needed. There were federal criteria that the States had to meet in order to get the funding and by 1982, every State was participating in this program. Federal funds for Medicaid have become a large part of every State’s budget; in fact Medicaid is now more than 10% of each States’ total revenue.

The Affordable Care Act expanded the coverage under Medicaid to include adults with incomes up to 133% of the federal poverty level. This was a big expansion of Medicaid and a large part of the costs for this expansion would be borne by the States. Under Federalism, the Congress could not force the States to expand the Medicaid coverage, but they hoped to coerce compliance by threatening the States with the loss of all federal funding for Medicaid if they did not expand the coverage as required under the ACA.

In addition to expanding the patient population eligible for Medicaid, the Affordable Care Act also required the States to increase the essential health benefits package. The Federal government agreed to pay the added costs of this expansion until 2016 at which time, they would decrease the payment gradually but not below 90% of the added costs. Still, the extra costs to the States would be substantial.

The States argued that these extra costs would be substantial even with the Federal payments and some wanted to opt out but they could not afford to give up all of the Federal subsidies they were already getting for Medicaid. The States felt that this penalty was coercive in nature and was forcing the States to do something the Federal government could not directly order them to do; again an unconstitutional act.

Justice Roberts agreed with the States on this issue. His vote along with several other justices severed this mandate from the Affordable Care Act. Since this severance was not lethal to the rest of the ACA, the rest of the Act was allowed to stand.



The Applicability of the Anti-Injunction Act

            The Anti-Injunction Act is a law that forbids anyone from suing to bar the collection of a tax. With this law, taxes can only be challenged after they have been paid; the cause of action would be to sue for a refund. Since Justice John Roberts and the government felt that the individual mandate was a tax, then the argument could be made that the case was not yet ripe to be heard by the Courts.

In fact, the Fourth Circuit had ruled that the plaintiffs could not challenge the individual mandate until they had paid the penalty.

Since Justice Roberts ruled that the individual mandate was really a tax, he then had to explain why the Anti-Injunction Act did not apply. He dealt with this issue by referring to the Internal Revenue Code which draws a consistent distinction between the terms “tax” and “assessable penalty”. Although the IRS can assess taxes and penalties, the Affordable Care Act does not give the IRS the power to treat the individual mandate as a tax for which the Anti-Injunction Act would apply.

Perhaps the tax (penalty?) was not really being used to pay for debts of the United States and that is why the Anti-Injunction Act did not attach.[5] Or if a tax is the penalty for not doing something ordered by Congress, then the Anti-Injunction Act would only attach if it was actually in the law for which the penalty was described. This part of the opinion was difficult to understand; suffice it to say that Justice Roberts held that the Anti-Injunction Act did not apply to this particular tax.

The dissent, having found that the individual mandate was not a tax to begin with, had no trouble concluding that the Anti-Injunction Act did not apply.


In summary, this Supreme Court case had three holdings:

  • The Individual Mandate was constitutional;
  • The plan to withhold all Medicaid funding from the States who refused to expand the Medicaid program and add the essential health benefits that came with it was coercive in nature and was, thus, unconstitutional;
  • The tax penalty that those who refused to buy health insurance had to pay was not subject to the Anti-Injunction Act.

States who refused to expand Medicaid were still allowed to get the federal funding that they were already getting with the original Medicaid program and this ruling allows the rest of the Affordable Care Act to stand.

This was the second time that Chief Justice Roberts saved the Affordable Care Act. Nancy Pelosi said we would have to pass the law before we could understand what was in it. I think she was right. The people and the Courts are still trying to sort things out and there are still sections of the law in litigation and other sections that are not yet ripe for suit; only time and resources will sort these issues out.

Now, with the recent death of Justice Scalia, it is unlikely that the Supreme Court will do much to stop the ACA from remaining the law. However, things may change if there is a republican president and control of the House and Senate remains in republican hands.

[1] Often referred to as Obamacare

[2] See my commentary on King v. Burwell

[3] Prisoners and undocumented aliens are exempt from the individual mandate. People with incomes below a threshold and Indian tribes, although they are subject to the individual mandate, are exempt from the penalty (tax?) if they do not purchase the insurance.

[4] Dissent of Antonin Scalia in National Federation of Independent Business v. Sebelius.

[5] Under Article 1 section 8, cl.1, Congress may “lay and collect Taxes, Duties, Imposts and Excises to pay the Debts and provide for the common Defence and general welfare of the United States.”



by Darryl S. Weiman, M.D., J.D.

Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN

MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 

How About Health Courts?

One of the goals of the Affordable Care Act, otherwise known as “Obamacare”, is to decrease the cost of health care. It is believed that some of these costs are related to medical malpractice; these costs are driven by high malpractice insurance premiums that health care providers must buy and the unnecessary tests and procedures that are done in a “defensive” manner to better help in defending a future, potential, negligence claim.

Recognizing these costs, the Affordable Care Act allows for the award of five-year demonstration grants which will be awarded to the States to set up new methods of medical malpractice resolution. The plans should be designed to cut the costs associated with the current medical malpractice tort litigation and hopefully, allow the providers to stop practicing “defensive medicine.” These grants were to be appropriated starting in fiscal year 2011. To my knowledge, this has not yet occurred.

America’s current system of dealing with the tort of medical malpractice is woefully inefficient and costly. Juries often find it difficult in differentiating victims of malpractice from those who have suffered from an unavoidable outcome and the jury may fail in reaching reasonable awards for those who are injured.

Only two percent of patients injured by negligent care in a hospital ever file a malpractice claim (New England Journal of Medicine vol. 324, 1991 (370-6). The elderly and the poor are even less likely to sue (Medical Error: What do we know? What do we do? Jossey-Bass, 2002). For providers, going to trial can be a risky endeavor as you never know what a jury will do.

In Tennessee, for example, heart surgeons are sued for malpractice on the average of once every three years. One case where I was a named defendant occurred in 1996. The case finally went to trial with a defendant verdict in 2013. In this case, the first judge died and a second judge recused herself since she knew one of the defendants. So much for the concept of a speedy trial as a Constitutional right.

Because of the noted shortcomings of the present system, there have been proposals in the United States Congress, both in the House and Senate, to allocate money to the States to experiment with “Health Courts” and other alternatives to the present system of litigation, for resolving medical malpractice suits.  These courts did not get any traction in the past but they are now being restudied under the goals of the Affordable Care Act.

The proposed Health Court system will probably have a liberalized standard for negligence; a mistake or medical treatment falling outside a range of good practice will be compensable. The plaintiff will no longer have the burden of persuasion to show personal fault on the part of the defendant.

The Health Courts will be designed to expedite proceedings and improve patient access to the system. There will probably be limits on non-economic damages which will be based on the severity of injury. Damages will be set by an independent commission created by the State.

Under current models, the Health Courts will have public reporting of all cases settled or adjudicated. This would be a means for setting precedent for other courts dealing with similar fact patterns. There may even be a centralized reporting system so that there could be a uniformity of awards among all of the states.

What about the constitutional right to a jury trial? The Seventh Amendment states in part, “[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved…” The U.S. Constitution does not prohibit Congress or the States from creating new compensation rights or eliminating claims that were recognized by common law so long as any changes were part of a comprehensive administrative scheme that provides benefits for the claimant. New York Central Railroad v. White 243 U.S. 188, 200 (1917).

Based on the previous model formed by the Congress, the Health Court system would probably require an initial review of the claim by a Health Court Review Board. If the Board concludes that the injury was clearly due to malpractice, a payment would be made based on a published schedule of benefits. These claims would have expedited payments since they would fit the definition of an Accelerated Compensation Event (ACE). Examples of an ACE would be giving a drug to a patient who is known to be allergic to the drug, amputating or otherwise operating on the wrong extremity, or unintentionally leaving a foreign body inside a patient who has been operated on.

If the Board is certain that the claim was not due to malpractice or the injury was too small to justify an award, they can dismiss the suit.

For cases that are not clear, a Health Court trial would be the next step in the process. These trials, based on previous models, would be presided over by “specially qualified judges” with a background in science or medicine. The models previously discussed do not require the judge to have any legal training but this may change during administrative clarifications.

I am not sure how the judges would be picked for this system, but there was a plan put forth previously by the Progressive Policy Institute which would have the judges appointed by the governors of the States. These judges would have to have a background in science and/or medicine. It was not defined how much science (hard or social) would be required or how much medical knowledge. It was also not clear if the judge would need to be a medical doctor. Would nurses and PhD’s be allowed?

The Health Courts would have power to hire their own experts to help explain the issues relating to standards of care and causation. Lawyers could be present during the proceedings but there would be no juries

The hired expert witnesses would be tasked to help the judges make binding determinations as to standards of care, causation, compensation, and related issues such as comparative fault. The expert would be considered as neutral as to the case outcome.

It is foreseeable that there will be a new legal standard as to what constitutes an injury. An “injury” will be the result of a mistake that should have been prevented. An injury would not occur if “optimal” care had been given. This is known as the “avoidability standard”. This standard is more liberal than negligence but not as severe as the “no fault” standard. Plaintiff will no longer need to prove that the defendant breached the standard of care by acting negligently. He will only need to prove that optimal care was not given; a much easier standard to prove.

If liability is found, damages would need to be set. In the previous models, the damages were to be set by a schedule of benefits derived from a consensus process involving research into similar benefit schedules in the United States and abroad. The schedule would cover both economic and non-economic damages.

Non-economic damages would be listed in a tiered system based on severity of injury. The damage schedule would be adjusted annually on the federal level and then used by the state health courts. The overall goal of the system will be to reduce health costs by reducing liability payments and the malpractice costs of providers.

The benefits of the proposed Health Court system would be (1) quicker and more reliable justice; (2) improved patient safety; (3) lower overall costs; (4) allow for the patient to have a more trusting and open relationship with physicians and other health care providers; and (5) a liberalized compensation scheme to cover avoidable injuries without the requirement of proving negligence. (Bulletin of the American College of Surgeons, May 2006).

The Health Court system seems like a reasonable idea to bring more fairness to compensating patients who have been injured by health care providers. Physicians like the system; insurance companies like it; Republicans like it; the Institute of Medicine likes it.

Lawyers hate it! In fact, the American Bar Association (ABA) adopted a resolution opposing the creation of Health Courts in 2006. The resolution stated that the ABA has “a strong history of firmly supporting the integrity of the jury system, the independence of the judiciary and the right of consumers to receive full compensation for their injuries, without arbitrary caps on damages.”[1]

It is not clear what the role of the National Practitioner Data Bank will be, especially as it relates to payments not due to medical malpractice.

I am not very good at predicting the future, but I know that physicians will need to understand what is going on in the medical malpractice arena so they can better participate in the decision making process. It will be interesting to learn what the states will do with this grant money being provided under the Affordable Care Act.

[1] Janice Mulligan, Chair of Standing Committee on Medical Professional Liability, 2006.


MORE ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 

Closure of a State Exchange

One of the linchpins of the Affordable Care Act (ACA)[1] was to have health care insurance available for everyone. States were to form health care exchanges whereby people could shop for a suitable health care policy that fit their needs and still meet the requirements of the Act. If a state were to opt out of making an exchange, the Federal government would have a fall back exchange which could be used instead. The Federal government could not force the states to set up exchanges because that would violate rules of Federalism and the separation of powers.

In an effort to have the state’s set up the exchanges, the Act, in its original form, would only allow premium subsidies for those people who bought their health insurance on a state exchange. Surprisingly, only 17 states set up an exchange and 7 states developed a partnership exchange with the federal government; the other states opted to use the Federal exchange. The Federal government preferred the states to set up their own exchanges because the requirements of health insurance were under the powers relegated to the states. Each state would be in the best position to decide which policies would meet that particular state’s requirements.

Obamacare became a heated political issue and it was finally passed by Congress in 2010 with no votes from the republican side.  President Obama signed it into law.

Kentucky was one of the states that set up its own exchange. After the passage of Obamacare, Matt Bevin, the republican candidate for governor of Kentucky was able to win relying on a platform to do away with the ACA.

It is no surprise that Governor Bevin decided to close the Kentucky state run health care exchange “Kynect.” This exchange had originally been formed under the leadership of Steve Beshear, a democratic governor.

Governor Bevin felt that Kynect was wasteful spending since the Federal exchange could be used with relatively low costs to the state. With the recent Supreme Court decision of King v. Burwell, there would really be no penalty to Kentuckians who would still be eligible for premium support from the federal government. After all, Burwell held that state and federal health insurance exchanges were the same as far as health insurance premium support was concerned.

With the closure of this exchange, about 100,000 Kentuckians with private health insurance will now need to reapply for insurance through the Federal insurance exchange. This application can be long and difficult. There are more plans to choose from and the premiums vary considerably. Some people may opt out of getting health insurance altogether. They may have to pay a penalty (a tax) by being without insurance, but this tax will likely be less than the premium costs, anyway. Also, insurance can be bought at any time (guaranteed issue) and there is no penalty for waiting until you get sick (community rating).

It is likely that many of the 100,000 will hold off on redoing their health insurance until they need it. If relatively healthy people opt out of buying health insurance, this will put pressure on the insurance companies who rely on healthy patients to pay premiums and then don’t use the policy since they are in good shape. If insurance companies start to lose money, they may opt out of participating in the health insurance business of that state.

Here is some historical perspective. Kentucky was one of the first states to implement guaranteed issue and community rating in the 1990’s. Premiums kept rising as the insurance companies tried to stay solvent. Between 1994 and 1997, forty-five insurance companies left Kentucky because of rising losses.[2]

Several health insurers have been struggling under the Affordable Care Act. The nation’s largest health insurer, UnitedHealth Group warned that they may have to pull out of the exchanges by the end of 2016.  Tenet Healthcare, HCA Holding, Aetna, and Anthem are also struggling.[3]

There are several issues that will need to be addressed if Kentucky does close the state exchange. The state will first need to meet the obligations of the exchange through the end of 2016. Insurance companies who have participated thru the state exchange will then need to transition to the Federal exchange. Will these companies be willing to meet the requirements of the Federal exchange if they are significantly different from the requirements of the state? If the insurers are losing money, they are unlikely to stay in the business.

Is this closure of the state exchange just political posturing on the part of the republican governor who is trying to fulfill political promises? After all, there will be significant costs to the state and potentially to the citizens caught up in the transition.

The state will have to pay a 3% fee on insurance costs for the residents who use the Federal exchange. The state will also be at risk of losing $58 million of the federal grants it received for setting up the original state exchange.

Kentucky will still have to manage Medicaid and the Children’s Health Insurance Program (CHIP). These programs had originally been tied in to the state private insurance exchange; this uncoupling will likely result in some administrative costs to the state. Will the Feds cut back on the support of Medicaid and CHIP that they presently send to the state as a means to penalize the state for abandoning the state exchange?

Bevin’s approach to Medicaid will be different with the new system. Bevin says the state will still cover those whose income is up to 138% of the poverty level but there will likely be a decrease in benefits for those at or below the poverty line who do not pay Medicaid premiums. Bevin wants to model the Kentucky program after the Indiana program where people who do pay Medicaid premiums will get a better benefits package. It is uncertain as to how this will play out with the electorate.

There are some unknown unknowns that Bevin may have to deal with. Since King v. Burwell[4] showed that the Internal Revenue Service (IRS) controls the premium support available to the citizens, can the IRS financially punish the citizens of Kentucky to such a degree that Mr. Bevin will be forced to abandon his plans? I would not be surprised if pressure is brought to bear and Mr. Bevin may be forced to back off.  I don’t think any significant changes to Obamacare will occur until there is a new President and I don’t think the present executive will sit idly by while there is an attempt to close the Kentucky exchange.

[1] Commonly referred to as “Obamacare:.

[2] Conrad F. Meier, “Destroying Insurance Markets: How Guaranteed Issue and Community Rating Destroyed the Individual Health Insurance Market in Eight States,” The Council for Affordable Health Insurance and the Heartland Institute, 2005;

[3] Nathan Bomey and Jayne O’Donnell, USA Today, November 20, 2015.

[4] King v. Burwell, 576 U.S._(2015).


ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 

Physicians at Teaching Hospitals

In the United States, Medicare pays the salary and fringe benefits of interns and residents in teaching hospitals. This amounts to about $100 thousand per resident every year. Of this amount, the resident is paid about $40-$50 thousand per year in salary.

Some of the dollars from Medicare are paid to physicians in charge of training the residents. In addition, several billion dollars is paid to teaching hospitals every year to offset the added costs of training residents. These costs include malpractice coverage for the residents and the added costs generated by inexperienced physicians who have a tendency, it is believed, to order more tests and consults on their patients than are really necessary. These tests and consults are for “learning purposes.”

In the late 80’s, the Inspector General and the General Accounting Office decided to do an audit as to how this money was spent. This audit found that some of the money was spent on alcoholic beverages, trips to European countries, and fine works of art. Believing that this spending was not related to resident education or training, Congressional hearings were convened.

At the initial hearings, the teaching hospitals argued that Medicare policy on how the money could be spent was unclear. Although Congress agreed that the policies were vague, they also believed that spending on art, alcohol, and trips were clearly not related to the intent of the spending. As a result of these hearings, the initial Physicians at Teaching Hospitals (PATH) audits were done. These audits were intended to “make sure that the Federal Government is getting its money’s worth and that there is honesty in what is being done.”[1]

Historically, the charting on a patient was done by the residents. The attending physician would make rounds where the residents and medical students would present the patient, go over the latest clinical course, including lab values, EKG’s, and radiographs and results of other tests. A discussion would follow and a plan would be made. The history, physical exam, and daily notes were the responsibility of the resident.

For operations and other procedures, the resident who did the procedure or even small parts of a procedure, was expected to do the pre-operative note and the post-operative note and the dictated operative report which was a detailed description of what was done during the procedure including the operation performed, the operative findings, blood loss, specimens obtained, drains placed, and complications.

The documentation done by an attending was variable. Some attendings would do their own notes, some would just cosign the resident notes and some would do nothing. The television show House, starring Hugh Laurie, is a good depiction of attending involvement. House would go over the patient with the residents and he would do procedures on the patients, but he never made a note in the chart.

When I was a Surgical Resident in the late 70’s and early 80’s, night work was in the realm of the residents; including any operations that needed to be done. However, before anything was done to the patient (except for dire emergencies), the attending would be notified. He would then usually give the “go ahead”. At least the attending would be aware of what was going on. Sometimes (rarely) the attending would come in to the hospital but this usually meant that he did not trust the particular resident who had the on-call responsibilities at that time.

The only Medicare requirement for payment was to have some documentation of attending involvement. This documentation was usually met with some co-signatures in various parts of the chart. These co-signatures did not have to be dated and timed although they could be. Often, these co-signatures were placed at the time the patient was being discharged.

The PATH audits turned everything on its head. The Office of the Inspector General found that the University of Pennsylvania had significant errors in their billings. A percentage of billing errors was determined based on a sampling of medical records reviewed. This led to a referral to the Department of Justice (DOJ). The DOJ process used to estimate billing error used the OIG percentage of error results and used that percentage to estimate the potential False Claims for all Medicare part B services for multiple years. By using this methodology, the DOJ was able to claim a fine in the $100’s of millions range. Each violation (false claim) could have led to a fine of over $10 thousand. Since there were thousands of bills and using the percentage of error found in the OIG audit, the DOJ could put the University of Pennsylvania at grave financial risk if the Court were to rule with the government.

Because of the huge financial risk of litigating the claim, the University of Pennsylvania decided to settle with the Department of Justice for $30 million.

A similar audit at the University of Washington resulted in a $35 million settlement. I think the penalty may have been a little higher since one of the neurosurgery attendings tried to suborn perjury by having his residents say he was present in the operating room when he actually was not.

An audit of Dartmouth was initiated even though the OIG had no prior indication that the University was not properly billing. Dartmouth mounted a vigorous defense. The audit lasted for ten months and, according to Dartmouth, cost the institution $1.7 million in direct and indirect costs. When the audit was completed, the identified billing errors totaled $778. Dartmouth was vindicated but it still cost them a significant amount of money in the defense.

The OIG was making a lot of money and every University and Hospital with a training program was on the radar. A lobbying effort led to Congress shutting down the OIG but the chance of the audits starting up again remained.

The Affordable Care Act was passed by Congress and signed by President Obama in 2010. Many parts of the Act have been postponed by a stroke of the President’s pen; other parts have yet to be clarified by the Administrative bodies that have been empowered to enforce various sections of the Act.

One thing is clear. A major focus of the Act is to decrease the cost of Health Care in our country. A major mechanism of decreasing the costs is to eliminate waste, fraud, and abuse. It is likely that physicians will be closely watched to see that they are providing the services that they are billing for. Physicians at Teaching Hospitals will, once again, be scrutinized to be sure that they abide by the supervision requirements laid out by CMS and other third party payers.

At this point in time, the physician educator must document with specificity that he has seen and examined the patient. The documentation must include a pertinent history and physical exam and a plan of action to address the medical problem(s).

For physicians who are billing for a surgical or other type of procedure, there must be documentation that the attending physician was present for the critical portions of the procedure. In the past, a statement verifying that you were there for the critical portions of the procedure would have been sufficient for billing purposes. The physician could use his own judgment as to what a critical portion of the procedure was. I predict that the requirements will be tightened in the future. “Critical portions” are likely to be defined as the beginning of the operation (skin incision) and those other parts necessary to accomplish the operation successfully; this may now even include the closure of the incision.

I do not think that the teaching physicians will be required to do the critical portions of the operation themselves, but they will be required to be present in the room. This can be problematic from a resident training standpoint. If the residents in training are not allowed to do the critical steps of the operation themselves, then how will we know that they can do these steps when they, themselves, become an attending? It is a strong public interest to train physicians for the future. Will there be any wiggle room as to how much “presence” is necessary to allow for billing?

For now, a surgeon needs to be either (1) scrubbed and doing the procedure himself, or (2) scrubbed and first assisting the resident, or (3) not scrubbed, but in the room supervising the resident, or (4) not scrubbed, but available for immediate consultation. This last requirement usually required the attending to be, at least, in the hospital.

The time frame of the presence requirements has never been defined but I would not be surprised if the enforcers try to make it from beginning of the procedure until the end of the procedure. If they do this, it will mean that attending surgeons will need to be spending more time doing procedures and less time in the wards, seeing consults in the clinic, and meeting administrative responsibilities. Of course their research and teaching time will also be affected. This will mean that physicians will need to work more hours per day and/or that more physicians or physician extenders will need to be hired.

A more significant consequence of this more onerous presence requirement will be that future physicians will never have the opportunity to operate independently until they become an attending. Since all of the Surgical boards require a statement from the teachers that a particular resident can function “safely” and “independently,” it is obvious that a conflict is looming as to how best to train future physicians who do procedures, e.g., surgeons. If the law says that attendings must be present from the beginning to the end of a procedure, then there will be no opportunity for the resident to ever work without the attending looking over his shoulder.

While it is true that simulators are being developed to help surgical residents develop the skill sets needed to operate safely, they are not yet to the level of actually operating on a real live human.

It is clear to me that an unforeseen consequence of the Affordable Care Act is the reduction of the skill sets and confidence that the surgeons (and other physicians) in training need in order to operate in a safe and independent fashion. Future generations of patients will suffer as the best training methods in the world are being impaired by regulations mandated by non-clinician beaurocrats. As the older surgeons retire and/or die out, the replacements will just not be as good! What a shame.

Care will be cheaper, but it won’t be as good. I never thought that the American public would put up with this nonsense but I may be wrong.

[1] Senator Arlen Spector, October 21, 1991.


ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016. 

Retirement Looks Good About Now

With all of the new requirements for practicing medicine under the Affordable Care Act (Obamacare), retirement for those who can do it looks like a pretty reasonable option. Unfortunately, there is a clause under the Act that may take this option off of the table. Section 5210  Establishing a Ready Reserve Corps, amends Section 203 of the Public Health Service Act (42 U.S.C. 204) such that there will now be a Ready Reserve Corps for service in time of national emergency.

Physicians have always been subject to a draft during times of war. This new law now makes them subject to a draft during any national emergency. It is not clear under the law as to what would constitute a “national emergency,” but Section 203(c)(2)(D) states that the Ready Reserve Corps “be available for service assignment in isolated, hardship, and medically underserved communities …to improve access to health services.”

Physicians are the “ready reserve corps”. Not much has been written in the news media about this small section of the Affordable Care Act, but as a physician looking forward to retirement, it is of concern. In fact, the law specifically states that this reserve force must be able to respond on short notice and may even have to serve “involuntarily.” [1] Does this mean that they can keep me from retiring and put me in a medically underserved community which may need a cardiothoracic surgeon? The way I read the law, the answer is “yes.”

The uses of this Ready Reserve Corps would be to “ (A) participate in routine training to meet the general and specific needs of the Commissioned Corps; (B) be available and ready for involuntary (emphasis added) calls to active duty during national emergencies and public health crises, similar to the uniformed service reserve personnel; (C) be available for backfilling critical positions left vacant during deployment of active duty Commissioned Corps members, as well as for deployment to respond to public health emergencies, both foreign and domestic; and (D) be available for service assignment in isolated, hardship, and medically underserved (emphasis added) communities …to improve access to health services.”

On July 2, 2008, President Obama stated that “We cannot continue to rely on our military in order to achieve the national security objectives that we’ve set,” he said. “We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well-funded.” Could the Affordable Care Act be the first legislation used in setting up this new national security force and will the physicians so drafted be the spear-head of this force? Why should a civilian national security force need to be just as powerful as our military? Why does it need to be as well-funded? Will this force be armed with military style weapons? This seems to be overkill to me but there is not much on the internet or in the main stream media to help discern the role of this force.

Would this new force be constitutional? The ACA funds it and the Commissioned officers of the ready reserve are to be appointed by the President. This would be different than the commissioned officers of the regular corps which are appointed by the President with the advice and consent of the Senate emphasis added. Why no requirement for the advice and consent of the Senate for the officers of the ready reserve corps? I don’t know but I am worried. Who will the president appoint? What kind of power will these officers have? Will it be the same type of power as the regular corps or will there be differences? Where will the checks and balances be if the Senate has no role in deciding who these officers will be; this is very different from the requirements of the other uniformed services. Why the difference? Will this force only be answerable to the President?

Nancy Pelosi infamously stated that we would have to pass the Affordable Care Act in order to find out what was in it. What she has stated has now come to pass.

Sections of the ACA that I thought were clearly unconstitutional have passed Supreme Court scrutiny. First, mandating the purchase of health care insurance was deemed to be a proper exercise of the taxing power of the United States.[2] Originally, President Obama stated that this power was allowed under the Commerce Clause and it was not (emphasis added) a tax.  Justice Roberts stated the opposite in his opinion. The mandate was not allowed under the Commerce Clause but it is allowed as a tax. Oh, well.

The other Supreme Court decision that I was way off on was the case of King v. Burwell.[3] Originally, the ACA would only allow tax credits for those who used exchanges that had been set up by the States. When States did not set up an exchange, then the Federal government would set one up but the people in those states would not be given any tax credits which were intended to help pay the premiums for the health insurance. The intent of the Congress was to get the States to buy into Obamacare but many of the states chose not to do this.

Despite the clear language of the statute, the Internal Revenue Service, under the direction of the White House, started giving tax credits to everyone, even to those in States that had not set up an exchange. The Executive Branch is supposed to enforce the law, not change it. When this issue made it to the Supreme Court, the Court decided to repair the law. Since the Judicial branch is supposed to state what the law is, it seems like the Court was overstepping its authority when they essentially changed the law such that State exchanges really meant State and Federal exchanges.

By its decision, the Court essentially gave the Internal Revenue Service the authority to spend billions of dollars on tax credits for those using the federal Exchanges. The power of the purse, I thought, was to be invested to the legislature, not the Court. Boy, was I wrong.

It is said that the Supreme Court is not last because it is right, it is right because it is last. There must be finality in the law or we will have a society in disarray. Asking me to make a prediction as to a law’s constitutionality would not be a good idea; I am often wrong, especially as it relates to Obamacare.
[1] Section 203(c)(2)(B) of the Affordable Care Act.

[2] National Federation of Independent Business, et al., v. Kathleen Sebelius, Secretary of Health and Human Services, 648 F.3d 1235.

[3] King v. Burwell, 135 S. Ct. 475 (2014).


ABOUT THE AUTHOR: Darryl Weiman is a featured expert in on February 17, 2016.